nrd525 Market Tracker

[figmentofmyass]

This is a very interesting claim.  It probably was due to multiple causes.  The larger the bubble, the easier it is to pop it (or on second thought, maybe this isn't true as people who would short it get wrecked and you can run out of people who are feel they know enough to try to short?).  At least the larger the bubble the more likely it is to pop, as you have increased incentive to do so (and there are some rational people who take profit).

https://www.coindesk.com/trump-administration-popped-2017-bitcoin-bubble-ex-cftc-chair-says

as far as "buy the rumor and sell the news" goes, i'm sure the effect was significant. bubbles are built on hype---futures hype was a major part of 2017. CBOE announced their plan to list bitcoin futures in early august 2017, shortly before BTC/USD went parabolic.

once the CME market went live in december, there was nothing left to hype. the path of least resistance was down. did it pop the bubble? maybe, but if it wasn't the launch of futures, it would have been something else. blow-off tops don't typically last very long.

i disagree with giancarlo's suggestion that shorters in these cash-settled derivatives pushed the market down though. it was more about bubble psychology.

[nrd525]

Your argument is strong =)


Search trends: blockchain is holding up better than bitcoin.  So this is bullish. Though blockchain is far behind bitcoin in searches.  We need to see some use cases for the blockchain, otherwise that might die a slow death.
https://trends.google.com/trends/explore?date=all&q=blockchain

https://trends.google.com/trends/explore?date=all&q=bitcoin

As we crash through the 7700 floor and hit a new local low of 7300, currently 7500, I've still got bids from 3000 to 6000.

...

If you are in the US and think Clinton isn't running for president, you can make some relatively low-risk money on PredictIt.org where the odds of her running for the Democratic presidential nomination are 15%-20% (I'd estimate 0.1% to 1%).  Maximum bet is $850.  5% withdrawal fee, and 10% fee on any profit.  So maybe a 10% return.  Might take up to a year to get resolved, but hopefully would resolve at least by the 2020 DNC.

There are some weird spikes on PredictIt. For instance in the recent Canadian election market, the Green Party went to 20 cents (for prime minister) and the People's Party (which won zero seats and 1.5% of the vote) went up to 50 cents!   

There are more shenanigans going on with the US election markets, where Yang is very overpriced.

[nrd525]

What can we learn from this?  They've got some of the alt-coins like XRP and ETH as under-valued!
https://www.coinfairvalue.com/

[exstasie]

What can we learn from this?  They've got some of the alt-coins like XRP and ETH as under-valued!
https://www.coinfairvalue.com/

It all depends what value you place on their methodology:

Fair values displayed in CoinFairValue do not cointain speculation and have been calculated with the following assumptions:

• According to CFV theory, the velocity of money is driven by the individual's willingness to trade their savings for goods or services, which is believed to change over time. To account for this variable we are using a 1 year MA (Moving Average), filtering 2-sigma outliers. We are considering total discounted savings and not the current savings. The daily velocity of a currency based on total discounted savings is computed dividing the daily amounts transacted by the total discounted supply of the currency. If the investor wished to use a velocity based on current savings, they would just need to divide daily amounts transacted by the current supply instead. Be careful in the cases where a slow velocity of money is a consequence of a token issuer or company holding the majority of the currency supply. In these cases, one single person can change the overall velocity of the currency in an unpredictable instant.
• We are assuming that when currencies settle on their niches, their baskets shift ratio will move slowly enough. Based on that assumption, we are using a 1 year MA (Moving Average) on their basket average value, filtering 2-sigma outliers. Keep in mind that small currencies can be subjected to large temporary changes in their baskets average value.
• Transactions per day is the variable that has been observed to best correlate with the price movements. It order track the user base in a short-term basis, we have decided to just filter the noise of the transactions per day. We are using an EMA, filtering 2-sigma outliers as a smoothing function. The parameters of the EMA are selected per coin, in such a way that the bias is minimized and the noise is reduced to a minimum.

If the transaction volume rises or money velocity falls, the "fair value" increases. They also use these metrics in their calculation called "basket shift ratio" and "discounted supply" and I can't figure out what they mean. Like, why is Bitcoin's discounted supply 20.1 million BTC?

I'm skeptical. I also disagree with the fundamental idea that "fair value" is worth pursuing. Speculation is an integral part of price discovery. What I care about is price, not what is "fair" based on a bunch of weird guesses and opaque metrics.

[nrd525]

This is very scandalous.  And even if you buy Bitfinex's story, they were "conned".  What does that say about their leadership / team?
https://www.coindesk.com/polish-police-arrest-head-of-payment-processor-tied-to-bitfinex-crypto-exchange

[figmentofmyass]

This is very scandalous.  And even if you buy Bitfinex's story, they were "conned".  What does that say about their leadership / team?
https://www.coindesk.com/polish-police-arrest-head-of-payment-processor-tied-to-bitfinex-crypto-exchange

it either says they don't perform due diligence or they're cool with getting in bed with criminals out of desperation. considering how they approach banking, my bet is on the second one.

more reputable exchanges like kraken ditched crypto capital years ago---obviously for good reason.

[nrd525]

Unsure if Google can get decent search traffic from China, but this search trend for "blockchain" is basically flat after the Chinese president mentions it.  Also pretty flat globally and on the one day.

https://trends.google.com/trends/explore?date=today%201-m&geo=CN&q=blockchain

A major chinese official will probably say something bad about the blockchain or bitcoin within the next week.

[nrd525]

I'm a bit worried that competition might lead to unnecessary risks in this very new (new in that it looks legitimate and is at least organizationally independent of the highly variable rates offered by exchanges) industry of crypto lending.  But I'm also hopeful that we'll have some market leaders who figure out how to do this safely.

https://interest.coinmarketcap.com

[nrd525]

Reviewing some "fundamentals".

Bullish Factors
Global economy at peak of bull cycle. SP500 setting another all-time-high today.
Global (long term and also short term) interest rates at historical (50-60 year) lows
Lightning Network will allow low transaction fees
Transaction fees are around $0.20-$0.70 (room to grow)
Bitcoin market share at 67%
Bitcoin ecosystem is healthy - no talks of additional forks, no new controversial splits in the community
US / China trade war (currency part of it, not the actual impact on global economy)
Republicans are unlikely to overly-regulate crypto currency and are likely to hold a majority at least in the Senate post 2020
Use case for speculation is solid.  Bitcoin is digital gold for gamblers.
More ways to speculate on bitcoin (CME, CBOE, Bakkt, additional futures)
More ways to lend out bitcoin (also stable USD coins and altcoins) with Celsius Network, Blockfi, etc
May 2020 Halvening
ETF hasn't happenned yet, but seems likely in the next 1-5 years
At 9k now, we just spiked 40% up in a single day.  Bullish also from 3.2k bottom
China might be serious about regulating and allowing cryptocurrency usage beyond mining (president made a statement, they are working on legislation)
Volatility helps Bitcoin fulfill its "Digital Gold for Gamblers" function
US IRS allows specific lots for determining capital gains
Added: Bitcoin has a strong network effect.


Bearish Factors
Global recession is coming (ex. US unemployment rate of 3.6% hasn't been sustained since 1960 or before without a recession)
Low rates fuel bubbles (property, crypto, stock, art, etc)
Lightning's volume is insignificant
Google Search Trends are lagging price (and lower than in the 2017 bull market)
NVT signal shows signs of being over-bought (though not as bad as in August when I last posted this and we fell 35%)
IRS increased interested in collecting capital gains
We might have exited the bear market prematurely (inadequate damage to ICOs, altcoins, self-fulfilling prophecy of another bull market is too good to be true)
No major use cases for bitcoin other than speculation (transactions, remittances, the nonsense about being your own bank -- all not that useful)
Centralized stablecoins (or even just USD payment systems) are better suited for beating credit cards
Lawsuits against Tether make strong arguments
Blockchain is falsely equated to the internet as a revolution in something - not true!
Lack of premiums in non-US exchanges (ex. in the past we had China premiums in 2013 and Korea in 2017)
Added: there are an infinte number of possible crypto-currencies and the network effect can be overcome. Bitcoin is replaceable.


Indeterminate Factors (risk?)
Mt Gox bankruptcy returns some of the coins.  Wow this is taking forever!
Regulators haven't taken a strong position on ICOs
Satoshi identity(ies) is not known. Potentially owns 1 million btc.
Unresolved situation for small transactions where you are responsible for capital gains if they buy coffee
Unregulated stable coins like Tether (could be scams, regulatory crackdown -- ex. research papers on correlation between printing new Tethers and price increase in bitcoin)
Facebook Libra coin
https://alternative.me/crypto/fear-and-greed-index/  (doesn't seem so useful longterm, needs more data)
GBTC premium - https://crypto.neotechdevs.com/GBTC.jsp?chart=year#charts
Hacks, scams, ponzis

[illyiller]

Reviewing some "fundamentals".

I see a whole lot of bullish and bearish factors listed, but where do you actually think the price will go? 2020 halving hype vs. global recession, which one will win out?!

[nrd525]

I have no idea where the price is going.  I'm slightly bearish short term (0-2 years), bullish long term (3+ years).  Google search trend points to $4500 and generally trumps other factors because it is quantifiable (or say a range of 3k-6k).  I've removed my bids, but am not selling. 

Good podcast.  Dollars are the safe haven, not bitcoin.  And other great points.
https://www.coindesk.com/podcast-josh-brown-on-why-bitcoin-is-like-the-1800s-railroad-boom

[exstasie]

I'm slightly bearish short term (0-2 years), bullish long term (3+ years).

So the rally to $14K this year was just a bull trap?!

Google search trend points to $4500 and generally trumps other factors because it is quantifiable (or say a range of 3k-6k).  I've removed my bids, but am not selling.

How do you quantify Google trends into price though?

I think present day search trends mimic what we were seeing in the autumn of 2016, and we all know what happened after that. Compare these two charts:

https://trends.google.com/trends/explore?date=2016-01-01%202016-10-01&q=bitcoin
https://trends.google.com/trends/explore?q=bitcoin

[nrd525]

A long period of anything is bullish if you think bitcoin is always going to have another bull cycle and if you look at bitcoin's price history.  So you could take a period of stability, decline, or growth and say "look what happened in x months/years/weeks - we went up 100x!  =)

But one day bitcoin won't have another bull cycle. It should be more likely that bitcoin would go down 90%, than up by a factor of 10x (at least over the next 10-20 years).  Now I'm bullish enough to be gambling on "one more bubble", but at some point I might get suckered along with everyone (well 95% to 99%) else...

I see the rise to 13k/14k as being completely unsupported by search trends and thus actual public interest in bitcoin.  Of course some major event or set of projects could develop this public interest.  It isn't like google search trends affect future google search trends. I think there is more of a project development cycle where it takes a couple years for exchanges, lightning network, regulation, etfs, and other projects to develop (keeping people busy/inspired) and then launch (which might cause a bubble).

[figmentofmyass]

I see the rise to 13k/14k as being completely unsupported by search trends and thus actual public interest in bitcoin.

why would you expect search trends to be booming already? public interest spikes during the parabolic mania phase of the bubble/bull cycle:



i don't think the market is anywhere near that point. in the above example, the $14k run is more comparable to the "take off" phase and the june-october correction was the "first selloff/bear trap".

the public hasn't really taken notice yet. and they hadn't taken notice after the initial "take off" in october-november 2015 either. the public is always late to the party---they are the late adopters, not the smart money or early adopters.

[exstasie]

But one day bitcoin won't have another bull cycle. It should be more likely that bitcoin would go down 90%, than up by a factor of 10x (at least over the next 10-20 years).  Now I'm bullish enough to be gambling on "one more bubble", but at some point I might get suckered along with everyone (well 95% to 99%) else...

If Elliott Wave theory prevails, then that's a reasonable enough assumption. "What goes up must come down."

Here's an alternative theory though. What if Bitcoin adoption follows the adoption curves of other mass adopted technologies? Look at the way television penetrated 90% of society and then just plateaued forever after:



Could Bitcoin follow the same course?

What would price look like if Bitcoin were widely adopted as a currency and store of value, and everybody used it just like they do electricity or television?

[nrd525]

I'm surprised the percent of households with TVs isn't in decline. I got rid of mine (and I'm in my forties)! 
https://www.tvtechnology.com/news/number-of-u-s-tv-homes-grows-to-120-6-million-says-nielsen

There is no major use case for bitcoin or the blockchain that warrants the current market cap.  A decentralized database isn't going to come close to the economic impact and usefulness of centralized databases (I'm a database developer).

I should modify my use case. Bitcoin is "Digital Gold for Gamblers and True Believers".  And to all of you true believers, my plan is to sell out at the top (well as close as possible) and for you to lose 99% of your invested money.

[exstasie]

I'm surprised the percent of households with TVs isn't in decline. I got rid of mine (and I'm in my forties)! 
https://www.tvtechnology.com/news/number-of-u-s-tv-homes-grows-to-120-6-million-says-nielsen

Same but people love their televisions. Most people I know still veg out in front of them every night. They just have all their internet services (Hulu, Prime, Netflix, etc.) plugged into their TV instead of PC.

There is no major use case for bitcoin or the blockchain that warrants the current market cap.  A decentralized database isn't going to come close to the economic impact and usefulness of centralized databases (I'm a database developer).

Bitcoin uses a decentralized database to store the state of the blockchain, but it isn't exactly competing with centralized databases. It's competing with other forms of money, like gold for instance.

I should modify my use case. Bitcoin is "Digital Gold for Gamblers and True Believers".  And to all of you true believers, my plan is to sell out at the top (well as close as possible) and for you to lose 99% of your invested money.

Fair enough but keep in mind, the greater fool's theory applies to all assets, not just Bitcoin. Who says dollars or gold will retain their value either?

[nrd525]

When people say bitcoin is decentralized and you learn things like this:
https://www.coindesk.com/bitgo-says-its-now-processing-20-of-bitcoin-transactions

Why so many transactions? Perhaps they are doing a lot of exchange volume?  Or maybe people just don't care about the fees and aren't bothering to batch (or otherwise limit) their transactions.

To the extent that centralization can facilitate regulation and professionalization of services, it is probably bullish for bitcoins.  Especially so long as the hard core decentralizers don't get upset!  (I'm normally a huge fan of decentralization, but am here for the $$$ not the politics).

[exstasie]

When people say bitcoin is decentralized and you learn things like this:
https://www.coindesk.com/bitgo-says-its-now-processing-20-of-bitcoin-transactions

Why so many transactions? Perhaps they are doing a lot of exchange volume?

They provide custodial services to lots of major exchanges, so yes. However their custody model entails multi-signature security so they aren't a single point of failure in exchange security breaches.

To the extent that centralization can facilitate regulation and professionalization of services, it is probably bullish for bitcoins.  Especially so long as the hard core decentralizers don't get upset!  (I'm normally a huge fan of decentralization, but am here for the $$$ not the politics).

For exchanges, I see no problem here regarding decentralization. Using Bitgo is more secure than not using Bitgo.

As far as individuals go, I'd like to see people securing their own private keys.

[nrd525]

And the China ban is back on =)  Or they probably want to do some blockchain stuff while staying away for speculation and ICOs.
https://www.coindesk.com/china-is-poised-for-another-crypto-trading-crackdown-as-speculation-returns